Union of Small and Medium Enterprises reiterates demands for facilitating Micro, Small and Medium Enterprises in Budget

Karachi, May 22, 2015 (PPI-OT): The Union of Small and medium Enterprises (UNISAME) in a prior to budget meeting of its forum urged the federal finance minister Ishaq Dar to ensure facilities for the majority sector namely the micro, small and medium enterprises (MSME) and to ensure a balanced budget providing level playing field to all sectors of the economy. UNISAME has proposed practical scientific measures for the promotion and development of the sector.

President UNISAME Zulfikar Thaver reiterated the requirements of the MSME sector and invited the attention of the Ishaq Dar to the lack of access to finance. The commercial banks definitely need training in risk management and for this reason the aspect of collateral management needs to be carried out with emphasis.

The MSMEs need finance to purchase raw material, install machinery for balancing modernization and replacement. They need bridge financing and post shipment financing and the access to finance which is lacking for want of collateral. This aspect needs to be addressed seriously. The budget must allocate funds for specialized subsidized financing under special schemes for the MSMES.

Whilst appreciating the reduction in discounting rates, he pointed out that the withholding tax on profit on deposits needs to be reduced to encourage savings and to make sure that the senior citizens income from savings is not insufficient for survival.

The federal minister needs to realize that banking, insurance, leasing and logistics are the pillars of the economy and these tools need to be sharpened to facilitate the MSMEs. Again whilst appreciating the credit guarantee insurance scheme for the banks to make them comfortable the UNISAME chief stressed the need to increase the share of the government to 60% instead of 40%.

The other aspect is to make doing business easy and attracting investment by one window operation in the true sense. The government needs to seriously promote collaboration, joint ventures and transfer of technology and provide funds in the budget for the promotion of joint ventures and collaborations especially with China.

For promotion of alternate energy all energy generation equipment and devices must be exempt from all duties and taxes. The solar energy installations are proving costly and need to be subsidized for fast track installations and must be made mandatory for all new buildings, factories and schools and hospitals as an alternate line of energy resource. The country enjoys the blessings of sunlight and this could be utilized.

The other important requirement is land at concession and easy payment facilities to enable the entrepreneur to pay the cost of the land on easy instalments in industrial estates and special economic zones.

Thaver said it is needless to say but the SME Chamber of Commerce, SME Institute, specific SME bank, SME export house and ombudsman promises in the SME policy remain unimplemented. He urged the finance minister to consider the importance and the necessity of these institutions for SME promotion and development.

The union also called upon the minister to strengthen the Small and Medium Enterprises Development Authority (SMEDA) and provide for increasing the scope of the authority in the budget. SMEDA needs to be strengthened with more personnel and must have wider outreach to cater to the primary, secondary and the tertiary sectors of the economy.

UNISAME appealed to the minister to lower the rate of taxes for enterprises and exempt the new industries for a period of 3 years. Import substitution and innovative industries must be provided additional relief for their innovative role.

Imported raw material and packing materials imports must be allowed on lower letter of credit margins and duties must be reduced to encourage industrialization. The tax exemption limit must be enhanced up to Rs 600000 per annum and income tax on association of persons (AOP) must be rationalized to avoid double taxation on individuals and firms as most of the enterprises are family businesses.

The cash withdrawal from banks limit for the purpose of withholding tax must be enhanced to Rs 100000 from Rs 50000 to facilitate smooth transactions. The government needs to realize the fact that whatever relief is given to the sector it will be returned back in the shape of increased revenue due to growth of the sector and the government must not increase taxes on the existing tax payers but broaden its tax net.

The MSMES are bothered by corruption and have to pay illegal gratification and most of the departments are now calling it speed money. The anti-corruption department must be strengthened to cover the several organizations and the monitoring must be sharpened.

The law and order situation could be strengthened with the setting up of protection squads in industrial areas and for this UNISAME has proposed the setting up of the SME Liaison Committee (SME-LC) under the Federal Investigation Agency (FIA) or the Rangers as the police cannot cope up with the criminal activities of the activities of the miscreants which enjoy political patronage.

UNISAME has invited the attention of the federal finance minister to the vast potential of the sector and urged him not to undermine the sector which could turn the destiny of Pakistan if seriously promoted, supported, facilitated and encouraged.

For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Tel: +92-21-35884225-6
Fax: +92-21-35380642
Cell: +92-300-8245307, +92-321-8245307
Email: unisame@gmail.com